Excitement is burning in the cryptocurrency industry, but investors should not get ahead of themselves.
At the current price of around $68,500, bitcoin (btc 0.34%) It has a market capitalization of over $1.35 trillion, making it the most valuable cryptocurrency in the world. In fact, it represents more than half of the total $2.55 trillion market capitalization of the entire crypto ecosystem.
But Ark Investment Management and its technology investment leader, Cathie Wood, believe Bitcoin is destined to go much higher. Ark research suggests the cryptocurrency could soar 2,115% to nearly $1.5 million by 2030, but Wood herself recently presented an even more optimistic estimate, saying Bitcoin could soar 5,453% to $3.8 million. Dollars.
Investor enthusiasm for Bitcoin and the broader crypto industry is rising right now, but widespread adoption remains far out of reach, so is Wood's latest forecast realistic?
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Bitcoin may never replace traditional money
Bitcoin enthusiasts often say that cryptocurrency It is a valid candidate to replace traditional money because it is truly decentralized. It is not controlled by any person or institution, and its block chainThe data-driven registration system is accurate and transparent.
I don't agree with the idea that it can replace existing currencies for several reasons. The ability to control the money supply allows governments and central banks (such as the US) Federal Reserve) to cushion economic shocks during turbulent periods. Additionally, different economies operate at different speeds, which is why some currencies are more valuable than others.
If each country adopted a currency, such as bitcoin, many exporting nations would lose one of the mechanisms by which they remain competitive. For example, two countries that export oil could have different production costs, because one could have higher labor standards than the other. As a result, that country would have to charge more money for the exact same product. A weaker currency offsets some of that price difference for the buyer, allowing the exporting country to compete with those that have lower production costs.
The benefits of each nation having its own currency were also seen when the United Kingdom voted to leave the European Union in 2016 (an event known as Brexit). Investors feared that the UK would suffer economically from a decline in free trade with Europe, so they quickly devalued the pound sterling by 16% (relative to the US dollar). Pessimism aside, it instantly made the UK much more competitive as an exporter on the global stage, thus cushioning some of the economic shock.
In theory, the only way Bitcoin could be adopted as "the" global currency is if each nation agreed to operate under one government, with common economic goals. Given the current state of world politics, I'll bet my bottom dollar it won't happen anytime soon.
So far, few consumers and businesses have voluntarily adopted Bitcoin
The reality today is that very few businesses are willing to accept Bitcoin as payment for goods and services, meaning consumers don't have much incentive to hold it except for speculative purposes. According to Cryptwerk, only 9,449 merchants accept Bitcoin, which is a drop in the bucket considering there are over 300 million registered businesses worldwide.
Bitcoin plummeted 65% in 2022 and then rose 255% in 2023. That level of volatility would make cash flow management impossible for any company, which is another argument against its usefulness as a currency.
Ark Invest points out eight Bitcoin use cases that could drive its adoption by 2030. Most of them focus on countries, businesses and consumers using Bitcoin to make payments and settle transactions. For reasons I've already highlighted, I don't like the chances of that happening on a large scale. But three of Ark's possible use cases suggest that Bitcoin could be used as a store of value:
- Digital gold: Ark believes that Bitcoin could be treated as digital gold, which will create demand from multiple sources. While Bitcoin is volatile, its decentralized nature and long-term upward trajectory support its credibility as a store of value.
- Corporate treasury: If Bitcoin is considered a store of value, Ark believes companies could keep a small portion of the cryptocurrency on their balance sheets. This could help offset inflationary pressures over time, for example.
- National Treasure: Many global governments and central banks hold physical gold in their reserves. Once again, Bitcoin could be a great addition to those reserves if it is considered a store of value.
Store of Value Argument Won't Make Bitcoin Hit $3.8 Million
At the Bitcoin Investor Day conference in March, Wood said the recent release of Bitcoin Exchange Traded Funds (ETF) could generate a wave of demand from institutional investors. It's a key reason why he believes the cryptocurrency could soar 5,513% from now to $3.8 million by 2030, which is well above his own company's target of $1.5 million.
The problem with Wood's forecast is that a price of $3.8 million per Bitcoin implies a final market capitalization of $79.8 trillion. It means that Bitcoin would be almost 3 times more valuable than the entire US economy, based on the latest annual GDP figure of $28.3 trillion. It would also be 25 times more valuable than microsoftwhich is the largest company in the world today.
To me, that doesn't seem realistic. After all, the existence of ETFs doesn't suddenly make Bitcoin a viable currency worthy of widespread adoption. But as a store of value, it is conceivable that Bitcoin's market capitalization could one day equal that of gold, which is currently around $15.7 trillion.
That implies that Bitcoin could trade at $817,000, which would be an increase of 1,094% from here. So, the cryptocurrency could still generate attractive gains if enough investors view it as a store of value, but I wouldn't bet on it skyrocketing 5,513% from here to meet Wood's forecast.
Antonio DiPizio has no position in any of the stocks mentioned. The Motley Fool positions and recommends Bitcoin and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
